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Convergence of Fasb and Iasb

In: Business and Management

Submitted By melbuni
Words 1488
Pages 6
1.
Convergence Project is undertaken by the IASB and the FASB jointly aiming at removing the differences between the two sets of accounting Standards, the GAAP and the IFRS. In other words, the main purpose of the project is to make the accounting standards of both the IASB and the FASB comparable so that there will be a global used accounting standard. (Deegan 2010, p49) This project will make international financial reports more comparable and more helpful for information users.
The development of Conceptual Framework is a basic requirement for the changes of accounting standards. With the international convergence of financial framework, a more developed common framework is required to provide a basis for the IASB and the FASB to develop high quality common standards, to eliminate differences between the two sets of standards and to seek to replace weaker standards with stronger standards; Therefore the development of conceptual framework project is a basic need for the conducting of convergence project. In addition, the convergence project will lead professionals to realize the change of information demand and financial system. Because of these changes, the conceptual framework, being developed two decades ago, need to be evolved. (Deegan 2010, p49) Otherwise the current conceptual framework will not be helpful to issue a common set of principle-based standards. (IASB 2005)

2. TT * Limitation to meet current financial environment.
The conceptual frameworks of both boards were developed decades ago and they cannot meet the requirement of daily changing financial environment. The development is essential to meet the information user demand under current international financial system. * Cost to develop
The conceptual frameworks are costly to develop and there is no need to spend so much resource on two sets of conceptual framework. At the point...

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